The Reserve Bank of India (RBI) projects a decline in banks’ gross non-performing assets (GNPA) ratio to 2.5% by FY25, following a drop to a 12-year low of 2.8% in FY24. This improvement, driven by reduced new bad loans and increased provisioning, is notable across state-run and foreign banks. The system-wide net NPA ratio also reached a record low of 0.6%. Stress tests indicate banks’ resilience to economic shocks, suggesting they are well-capitalized without immediate need for additional funds, despite varying scenarios of potential GNPA ratios in adverse conditions.
RBI Forecasts Improved Bank Asset Quality by FY25
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